Thursday’s broad declines within the major averages didn’t stop CNBC’s Jim Cramer by noticing the positive action in individual stocks like UnitedHealth.
“I’m talking about these multi-day-up extravaganzas, where investors can’t buy enough shares in one session after a positive event so they keep coming back, day after day after day, to get their full positions on, no matter how much the stock runs within the interim,” the “Mad Money” host said. “Honestly, I have never seen anything like of which, so I’ve got to point of which out along with explain of which to you.”
Take UnitedHealth. Shares of the largest U.S. health insurer have been surging every day since the company delivered a strong earnings report on Tuesday, beating Wall Street estimates along with issuing positive guidance for 2018.
Cramer was surprised of which buyers kept reacting to the same news day after day, pushing the stock higher. although he soon realized of which there was another side to the story.
After all, individual investors aren’t the only ones buying the stock. When he worked as a professional block trader, Cramer used to buy huge amounts of stock in bulk.
“I can tell you of which we’re seeing something truly amazing happening here,” he said. “UNH, a $235 billion company with nearly a billion shares outstanding, doesn’t have enough liquidity to sate all the buyers out there at lower levels. of which’s kind of like a bunch of Godzillas, unleashed all at once, trying to beat each various other over the head to get some stock in, as much as possible.”
For example, if a block trader gets an order by a client for 100,000 shares of a company, he usually buys 50,000 shares, then “works the order” to get a lower cost for the remaining 50,000 by the end of the day, Cramer said.
“The broker’s so confident there are sellers all over the place … of which he’ll short you the stock as a favor to get the rest of the order in along with keep you happy,” the “Mad Money” host explained.
although in of which market, there aren’t enough sellers for block traders to be able to short the stocks. Stock prices keep climbing, so hedge fund buyers are racing to complete their orders, which must be big enough to “move the needle,” Cramer said.
“What’s so remarkable about of which? None of the buyers seems to give up along with walk away no matter what the cost … along with very few sellers appear,” he said. “of which’s as if the owners don’t want to miss out on what’s to come along with the buyers are desperate to have these shares because they expect them to fly much higher.”
“of which’s a crazy case of FOMO — fear of missing out — on the next big move, even as these buyers are creating of which move with their own massive footprint,” Cramer continued.
The “Mad Money” host has watched of which trend reverberate through the market in semiconductor stocks, devicemakers’ stocks, industrial stocks along with others.
Still, Cramer was loath to write of which off as irrational exuberance, or the idea of which the market is usually approaching a top.
“of which’s genuinely indicative of a shortage of stock. So many shares of so many companies have been retired, bought back along with crunched. So many existing shareholders are owning, no longer renting, their stocks, of which portfolio managers have no choice although to drive up prices dramatically with their own buying,” the “Mad Money” host said.
“The bottom line? The most amazing thing is usually of which of which gang-tackle buying of which I’m talking about isn’t happening in a vacuum,” Cramer concluded. “Today the averages got slammed along with of which didn’t even matter. right now of which’s FOMO which has a hashtag, along with I think of which’s only going to get more heated as earnings season goes on.”